How the US attack on Iran could shake oil prices

"The Strait of Hormuz: The narrow waterway next to Iran is a choke point that handles a whopping one-fourth of the world's maritime oil trade and a fifth of liquefied natural gas shipments. Iran has previously threatened to close the strait. Still, "supply disruption to global markets would be limited even in the event that Iran retaliates against tanker traffic, given the expected US-led efforts to maintain supply through the Strait of Hormuz," Eurasia Group analysts wrote."

"Iran is OPEC's fourth largest oil producer and exports roughly 1.5 million barrels per day, primarily to China. Market watchers will pay especially close attention to whether the conflict damages Iran's Kharg Island terminal that's used for nearly all of the country's exports."

"The most market-moving scenario would be Iran striking infrastructure - like oilfields and export terminals - in other major Arab oil producing nations. This could temporarily remove a "substantial" amount of the 18 million barrels per day of non-Iranian exports from the Gulf region, oil analyst Clayton Seigle of the Center for Strategic & International Studies wrote in a recent primer on the topic. This would cause an especially large price spike."

The escalating Middle East conflict presents three critical flashpoints for global oil markets. The Strait of Hormuz, handling one-fourth of world maritime oil trade, faces potential disruption despite US efforts to maintain supply. Iran, OPEC's fourth-largest producer exporting 1.5 million barrels daily, could see production losses, particularly if the Kharg Island terminal is damaged. The most significant market risk involves Iranian retaliation against Arab oil infrastructure in the Gulf, potentially removing substantial daily export capacity and causing sharp price spikes. These developments occur amid ample global supplies and modest demand growth, though oil prices have recently risen to highest levels since last summer.

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